The tragedy in the town of Bento Rodrigues

Discuss about the Corporate Social Responsibility in Developing Country.

With the ramified changes in economic, the corporate social responsibility of the companies has been gaining momentum throughout the time.  In this case, the BHP Billiton Company is Anglo-Australian multinational mining, metal and petroleum dual-listed public company which is having headquartered in Melbourne and its case related to CSR have been analysed.  After evaluating the case of The town of Bento Rodrigues, it has been analysed that the BHP Billiton Company has faced high financial and non-financial loss and the incident has also resulted to death of 600 people (BHP Billiton, 2017)

The CSR activities of company are also famous with its other name such as corporate sustainability, responsibility of the corporate and sustainable busienss. It is observed that the work of company should go hand on hand with the society for rendering the better benefits to society. 

`The CSR disclosures in Sustainability report of BHP Billiton’s, regarding the unfortunate failure of the one of Samarco’s two primary tailings dams on 5th November 2015 presents an overview of the tragic disaster from the point of view of BHP Billiton. The failure resulted in flooding of the communities of Bento Rodrigues, Gesteira, Paracatu, Rio Doce and several other downstream communities due to emission of a momentous volume of mine tailings. It’s been observed that the said organisation has certainly mentioned the loss caused to the society, due to the disaster, in terms of life (19 people died; aquatic fauna affected; 2,200 hectares impacted along 650 river kilometres; severe impact on public and private infrastructure along with relocation of 3 communities), economy (inability of 7500 fisherman to sell fish due to fishing ban; impact on 300 rural producers with many other unable to continue producing) and environment (Water shortage in 10 cities) with considerate database. An apology extended for the same seemed courteous as well.

The immediate response taken by the organisation for the betterment of the affected, by extending temporary aids with respect to shelter, water and food; sending off geotechnical, disaster relief and humanitarian response experts, along with senior health and safety executives, environmental scientists and several other support staff; setting up of permanent presence in Belo Horizonte, seems remarkable and are explicitly mentioned (Blowfield, Karam, & Jamali, 2017).

Voluntarily assuming the responsibility Samarco deployed its thousands of employees for post disaster restoration and reconstruction. Even the employees served as building hands for the reconstruction of the damaged done to society by renovating homes, rebuilding roads, bridges and schools; rescuing and caring for animals; and delivering essential supplies to impacted families. The commitments made and undertaken by Samarco have been briefly disclosed too (Blowfield, Karam, & Jamali, 2017).

CSR activities of BHP Billiton Company

The legitimacy of company had been certainly eroded and it calls for other serious considerations to be thought over. Mere voluntary regulations on part of it cannot suffice. Proper control is needed to ensure that the organization adheres the legitimacy with which the society has counted upon and complies the basic principles of integrity, transparency, and accountability and due diligence.

The framework agreement for restoration entered by Samarco, BHP Billiton Brasil, Vale and the Brazilian Authorities has been discussed considerately which binds the parties in fault.  Fundação Renova (objects being reflected in its name: repairing, restoring and rebuilding), a private, non-profit foundation was incorporated by Samarco, BHP Billiton and Vale in June 2016 to implement the 23 socioeconomic and 18 socio environmental programs outlined in the above Framework Agreement.

Socioeconomic actions broadly comprising of: Social organisation; Infrastructure; Education, culture and leisure; Health; Innovation; Economy ran under a top priority list. The three communities under relocation comprised Bento Rodrigues (236 families), Paracatu (142 families) and Gesteira (eight families and were effectively consulted for rebuilding. Community members who were financially destroyed such as fishermen were provided with emergency financial support, providing the Brazilian minimum wage plus 20 per cent for every dependant through a debit card (Blowfield, Karam, & Jamali, 2017).

Regarding the environmental remediation actions stabilisation of the remaining dams and material within the river system seemed alarming. But higher rainfalls than the average worsened the conditions which created the need to complete the work before the next rainy season.

The point which requires serious attention in the disclosure was the appointment of a New York-based law firm Cleary Gottlieb Steen & Hamilton LLP (Cleary Gottlieb) for investigation of the immediate cause of the breach of the Fundão tailings dam. Although it’s mentioned to publicly share the findings but the sharing is done via a separate website rather than the disclosure report. Other than this, keeping its legitimacy to the society most significant, BHP Billiton initiated a comprehensive review of its significant dams and non-operated minerals joint ventures (Blowfield, Karam, & Jamali, 2017).

Although the organisation remained well versed with the disclosures as far as legitimacy theory is concerned, but there stands a serious chance on part of it that resulted in the illegitimate failure. The operation of BHP Billiton or be it any organisation in a society demands mutual care and concern. Nowadays the goal cannot be only increasing shareholder’s wealth, but some other due diligence responsibilities like, prior identification and mitigation; prevention of adverse impacts; and in worse circumstances which go beyond control ensuring proper compensation and equal access to justice (Bluszcz, & Kijewska,  (2015).

Framework agreement for restoration

The CSR disclosure of BHP Billiton Company after happening of 2016 act has shown the legitimacy theory which shows the increased benefits towards the society for the business functioning of organization.  It is considered that due to the disaster of town of Bento Rodrigues, there are several government authorities who have issued various rules and regulations for the betterment of the CSR activities of the company. The incident of the BHP Billiton was alleged by the Minas Gerais state environmental prosecutor as mistake of company which occurred due to the company’s failure of non-compliance.  After analysing the negative impact of disaster and negative impact of its case on the society, BHP Billiton Company managed its CSR activities and more focused to follow the proper strategic program such as legitimacy theory, implementation of the sustainable busienss practice, eco-friendly environmental system and increasing the overall outcomes of its business (Carter, (2015).  

In addition to this, it has also used triple bottom line in order to deliver the best result to society. After the incident of 2015, it adopted the advance eco-supportive system installed eco- supporting supply chain to strengthen its CSR activities for the social benefits of society. BHP Billiton Company also started to use its green washing system to strengthen the positive eco-logical benefits to society and increased its overall funding for tis CSR supportive program (BHP Billiton, (2016).

The legitimacy theory is one of the phenomena of the voluntary social work program and environmental disclosure of company which emphasis upon strengthen the corporate communication and rendering the best possible benefits to society.  BHP Billiton Company has strengthened the transparency of its financial statement by maintaining the reporting disclosure to its stakeholder. The incident of Brazil has shown the high amount of destruction to its financial position and also impacted the brand image. BHP Billiton Company have been including its CSR program in its vision statement and delivering the best supporting results to society for their social benefits. However, it has also included the due diligence reporting, management representation letter and CSR activities program to strengthen its reporting frameworks for the benefit of its stakeholder at large. CSR program and legitimacy theory has set up strong connection between the laws and regulation issued by United Nations Guiding Principles on Business and Human Rights for the benefits of society and international reporting frameworks (Saenz, 2018).

The CSR activities of BHP Billiton Company has focused on including the , BHP Billiton key health, safety, environment, community  and other social  development program for the sustainable benefits of the society. In the recent annual report of the company, it is analysed that it has contributed more than 5% of its average net profit of last five year for its corporate social responsibilities program.
BHP Billiton Company has followed proper CSR reporting program and effective work function to mould its reporting frameworks as per the asses UN global work program, global reporting initiatives which will eventually increase the results for the society on the sustainable basis (Gamu, & Dauvergne, 2018).

Legitimacy theory and CSR reporting frameworks

The legitimacy theory reflects the program and work effectiveness of reporting framework of the company which are indulged in handling hazardous work process. BHP Billiton Company has been operating busienss of oil, petroleum and mining program which focuses on the strengthening corporate governance program, effective work functioning and international reporting benefits for the betterment of the society (Paynter, Halabi, & Lawton, 2018).

As stated by the CSR report of United States Securities and Exchange Commission after Cambodia’s Minister for Water Resources, BHP Billiton Company contributed  $ 2.5 million payment for the social benefit of the people who got injured in Brazil (Behling, (2018). The CSR disclosure of BHP companies after 2016 include all the details required as per the legitimacy theory and strengthens its international reporting framework (Paull, & Whitsed, (2018).

Conclusion

The CSR disclosures in Sustainability report of BHP Billiton’s, regarding the unfortunate failure of the one of Samarco’s two primary tailings dams on 5th November 2015 presents an overview of the tragic disaster from the point of view of BHP Billiton. After analysing these details, it could be inferred that BHP Billiton have strengthen its financial reporting framework to make good use of its international corporate social responsibilities frameworks.

References

Behling, F. (2018). Socially (Ir) responsible Companies in the Twenty-First Century. In Welfare Beyond the Welfare State(pp. 145-173). Palgrave Macmillan, Cham.

BHP Billiton, (2016), Annual Report, retrieved from https://www.google.co.in/search?q=BHP+Billition+annual+reprot&oq=BHP+Billition+annual+reprot&aqs=chrome..69i57j69i60j69i61j69i60j69i59.5450j0j7&sourceid=chrome&ie=UTF-8

BHP Billiton, (2017), Annual Report, retrieved from https://www.google.co.in/search?q=BHP+Billition+annual+reprot&oq=BHP+Billition+annual+reprot&aqs=chrome..69i57j69i60j69i61j69i60j69i59.5450j0j7&sourceid=chrome&ie=UTF-8

Blowfield, M., Karam, C., & Jamali, D. (2017). Introduction. Corporate social responsibility in developing countries: a development-oriented approach. In Development-Oriented Corporate Social Responsibility: Volume 2 (pp. 15-26). Routledge.

Bluszcz, A., & Kijewska, A. (2015). Challenges of sustainable development in the mining and metallurgy sector in Poland. Metalurgija, 54(2), 441-444.

Carter, R. A. (2015). Innovative CSR Concepts Break Down Economic management Obstacles. Engineering and Mining Journal, 216(9), 44.

Gamu, J. K., & Dauvergne, P. (2018). The slow violence of corporate social responsibility: the case of mining in Peru. Third World Quarterly, 1-17.

Paull, M., & Whitsed, C. (2018). Why authenticity in corporate and employee volunteering matters for employee engagement management: an organisational behaviour perspective. In Disciplining the Undisciplined? (pp. 193-210). Springer, Cham..

Paynter, M., Halabi, A. K., & Lawton, A. (2018). The Neo-Institutionalism Influences on Corporate Social Responsibility Reporting Development in Australia: A Three Company Study. In The Goals of Sustainable Development (pp. 193-214). Springer, Singapore.

Saenz, C. (2018). The Context in Mining Projects Influences the Corporate Social Responsibility Strategy to Earn a Social Licence to Operate: A Case Study in Peru. Corporate Social Responsibility and Environmental management.